How far does Wave 2 typically retrace?
Wave 2 typically retraces 50%–78.6% of Wave 1, with 61.8% (the golden ratio) as the single most common terminal point. The absolute rule: Wave 2 cannot retrace more than 100% of Wave 1. Anything beyond 78.6% suggests the move was probably not Wave 1 at all.
Full Explanation
Wave 2 retracement statistics across decades of US equity data: roughly 35-40% of Wave 2s terminate near the 61.8% Fibonacci level, 20-25% near 50%, and 15-20% near 78.6%. Shallow retracements (23.6% or 38.2%) are uncommon for Wave 2 and more typical of Wave 4. Deep retracements beyond 78.6% are rare but technically valid as long as the 100% absolute rule isn't broken. When Wave 2 dips below 78.6% of Wave 1, the count often turns out wrong — what looked like Wave 1 was probably the first leg of a complex correction (W-X-Y) rather than the start of a new impulse. The 61.8% golden ratio retracement is by far the highest-conviction Wave 2 entry zone and the level most professional Elliott Wave traders position around.
- → Elliott Wave Theory Guide — the 5-3 pattern, rules, Fibonacci, wave degrees
- → How to Count Elliott Waves — 6-step process used on 108 instruments
- → Elliott Wave Fibonacci Guide — the 7 core ratios and how they're applied
- → Rules and Guidelines — the 3 absolute rules + 7 guidelines
RELATED QUESTIONS
Weekly wave counts on 108 US instruments
Every Monday Artavest publishes fresh wave counts with primary count, alternate count, and explicit invalidation levels.
View Weekly Analysis →